Business

Like it or not, the U.S. Postal Service isn’t going away anytime soon

mailbox

This is a guest post by researcher Tarun Wadhwa

A few blocks away from my apartment, a store remains that Yelp users describe as “dirty,” “disgusting,” “horrible,” and “saturated with bitterness.”  But this particular store is still in business, and probably will be for a long time to come.  What type of establishment could have their customers routinely express such deep rooted frustration, and still get away with it?  The local Post Office, of course.

At some point, we have all probably thought about doing something like what Michael Richards’ character Kramer tried to do on Seinfeld — get out of the system, permanently. In a famous exchange, when Postal Employee Newman asks him what he will do about his bills, cards, and letters, Kramer points out that he can use “e-mail, telephones, fax machines, FedEx, Telex, telegrams, and holograms.” And he’s right. For your everyday needs, there are now a wide variety of ways to communicate and conduct transactions. Few people actually want the bulk of the items that come through their mailbox these days.

But as despised and problematic as it is, the Postal Service is one of the most important institutions in this country. It is essential to a functioning economy, and is thankfully not going anywhere, anytime soon.

There have been plenty of loud declarations that Postal Service has failed and will be out of business shortly.  But these arguments usually reveal how little people understand about what the Postal Service actually does – and how little they appreciate this institution’s amazing reach and scale.  Handling over 160 billion pieces of mail in a year (40 percent of the world’s mail), the Postal Service provides universal coverage for accessing their services to the entire country for low, standardized prices.  They make regular deliveries to remote islands and secluded areas that would not be worth the trouble for a private business.

And in rural and low-income regions where broadband isn’t commonly available, they provide a much-needed lifeline for communication.

Most recently, Outbox, a start-up from Austin, Texas, has reignited the debate over the future of mail.  Since their launch in San Francisco earlier this month, they have attracted a lot of excitement with their simple plan to allow people to have their physical mail picked up, scanned, and digitized for a five dollars a month.  In reality, this may not be the only cost; they are reportedly exploring ways to bring the sketchy practices of targeted e-mail advertising to the physical world.  Furthermore, their marketing reveals a very immature understanding of why the Postal Service — which they strangely refer to as “America’s oldest social network” — cannot simply be “recreated” by a few guys driving around in a Prius.

A suggestion that often comes up is to just dismantle the Postal Service and have everyone switch to using private services like FedEx, UPS, and DHL.  The people making these arguments are probably unaware that these companies are deeply reliant on the Postal Service for many of their everyday functions – comparatively, they do not come close to the Postal Service’s domestic infrastructure.  One study estimated that in 2011, over 30 percent of FedEx Ground shipments were actually delivered by the Postal Service, and although they compete, these groups regularly partner with each other.

While it is true that the volume of mail has been declining for years now, the biggest issues currently facing the Postal Service have more to do with political incompetence than technological disruption.

Contrary to popular belief, the Postal Service does not rely on taxpayer funds to function.  However, because it is a government agency, Congress is able to demand that they provide universal coverage, and maximum service, regardless of cost – while at the same time refusing to allow them to make the tough business decisions that companies regularly face. Last year, ten postal workers went on a hunger strike to bring attention to a ridiculous requirement, instituted by Congress in 2006, that the Postal Service prefund its future retirees’ health benefits to the tune of over $5 billion a year (a requirement not present in any other government agency, and rarely seen in the private sector).  These expenses have brought on the continual state of crisis that the Postal Service has been in for the last few years.  Eighty percent of post offices lose money – but they are unable to shut these buildings down because few legislators want to answer to their constituents about why their local post office has closed.

Just as the decline of railroads forced the Postal Service to adapt in the 1970s, they are now again at a point where they must undergo major transformations – and luckily, there are plenty of ways to improve and modernize their services.

From Amazon to Birchbox, businesses rely on being able to get small goods to their customers at a cheap price.  In addition to the eight million people and 1.1 trillion dollars in direct mail, financial services, and related industries that are directly reliant on the Postal Service, the future of many small businesses and entrepreneurs hang in the balance as well.  There are over two million sellers on eBay, and there are also over twenty-one million self-employed workers, many of whom rely on selling goods on the internet and shipping them through the Postal Service for their livelihood.

Like many government programs, we are intimately familiar with the inefficiency and frustration of receiving services, but we don’t grasp the huge amount of work and logistics needed to provide them.  The Postal Service isn’t a dying industry, it’s far from it.  We should notsimply just wish it away without thinking of the deep and lasting consequences that its absence would create.  But that doesn’t mean I won’t fantasize about it next time I’m stuck in line at the Post Office.

Tarun Wadhwa is a research associate at Singularity University researching how advancing technologies can be used to solve public policy issues. 

Follow him on Twitter @twadhwa


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